Glitches prompt probe into ATO system upgrade

The inspector-general of taxation will investigate claims the troubled upgrade of the Australian Taxation Office’s IT system caused hardship for taxpayers and tax agents and adjudicate whether the $879 million in government funding delivered value for money.

Assistant Treasurer
Nick Sherry
yesterday released the terms of reference for inspector-general Ali ­Noroozi’s review, which was announced on Friday in response to complaints from the tax community.

“The terms of reference are wide-reaching to ensure that all aspects of the program are investigated," Senator Sherry said yesterday. “In particular, I want a clear understanding on how taxpayers have been affected."

The review will examine the impacts of the IT change program on taxpayers, taxpayer representatives and the ATO, and determine if resources were used efficiently.

The upgrade of the income tax processing system has been marred by delays and a cost blowout from the original $445 million estimate.

It has caused refund delays, the omission of 140,000 cheques in refund letters and postponement of ­superannuation co-contributions. Because tax agents are generally only paid after their clients receive the ATO refund, some accountants have experienced cash-flow problems.

Taxation Institute of Australia senior tax counsel Robert Jeremenko said the ATO’s change program should have made it easier for tax ­professionals to obtain refunds for their clients, in line with its aim to “deliver improvements to the client experience".

“Our members work at the coal face and are seeing the problems this has created first-hand," he said.